Chandrababu Naidu returns: Here are 5 things investors should know about Amaravati's real estate market - Hindustan Times
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Chandrababu Naidu returns: Here are 5 things investors should know about Amaravati's real estate market

ByShakshi Jain
Jun 13, 2024 10:02 AM IST

Amaravati’s real estate market has been in the spotlight owing to a sharp surge in realty prices following the victory of Chandrababu Naidu’s Telugu Desam Party

Real estate prices in Andhra Pradesh’s Amaravati surged by as much as 100% in the days following June 4, when Chandrababu Naidu-led Telugu Desam Party returned to power with a thumping majority in the state assembly polls. Additionally, the party bagged 16 out of the 25 Lok Sabha seats in the state, scoring a key position in the NDA coalition at the Centre.

Real estate prices in Amaravati in Andhra Pradesh surged by as much as 100% in the days following June 4, when Chandrababu Naidu-led Telugu Desam Party returned to power (Representative Photo/HT)
Real estate prices in Amaravati in Andhra Pradesh surged by as much as 100% in the days following June 4, when Chandrababu Naidu-led Telugu Desam Party returned to power (Representative Photo/HT)

“The prices of real estate in Amaravati have recorded a V-Shaped recovery since the declaration of the election results with the mandate of a stable government,” said Anarock’s Prashant Thakur, adding that land rates have increased by almost 60% to 100% in the past few days with the number of sellers reducing sharply.

Also Read: With Amaravati back in focus after Naidu as CM, what happens to Hyderabad real estate prices?

The idea of Amaravati as Andhra Pradesh's capital was Naidu's brainchild, floated during his chief ministerial term between 2014-19. However, the strategically chosen city in the heart of Guntur district, is said to have witnessed a setback under successor Y S Jagan Mohan Reddy’s tenure.

According to local brokers, land prices in Amaravati were around 25,000 to 60,000 per sq yard in 2019. During YSRCP, these prices went down to almost 9,000 to 18,000 per sq yard and are currently at 30,000 to 60,000 per sq yard.

Naidu’s return as Andhra Pradesh Chief Minister has given rise to widespread speculation and heightened expectations of a revival in Amaravati’s progress.

“With Amaravati getting the capital city status, and the political and financial support expected from the NDA coalition at the Centre, investors would be reassured about the city’s growth and progress,” said Nomaan Ellahi, Senior Vice President at proptech startup Square Yards.

Here are five key things investors should know about the real estate market in Amaravati.

1 Price boom a one-off phenomenon?

Real estate experts, who spoke to HT Digital, termed last week's boom in real estate prices as a one-off phenomenon, triggered by political developments. Moving forward, while property prices are expected to grow positively, the pace of growth may moderate to a more stable rate, they said.

Also Read: What's next for Amaravati, the dream capital of Andhra Pradesh CM Chandrababu Naidu?

“As the plans for development formalize in the coming days and years with the masterplan getting implemented to build the greenfield capital city, it is estimated that prices will rise further,” Thakur said, adding that since a sharp price rise has already taken place, further appreciation may be moderated for land assets.

Prices of new developments across asset classes are likely to rise as the execution progresses, he added.

2. May benefit the commercial real estate sector in Amaravati

In the initial months, the new political dispensation is expected to focus on enhancing the ease of doing business within the state, which will bode well for the commercial real estate segment.

Real estate experts said that it may take at least a quarter before new launches take place. 

3. Affordable housing may witness growth in Amaravati

In the residential segment, near-term demand is expected to stem largely from the affordable housing category in the absence of a well established model for the premium bracket. A majority of Andhra Pradesh, over 60%, falls under rural India.

However, those like Thakur pointed out that the mid-end and luxury housing segments may benefit from the city’s capital status.

4. Housing launches may pick up after a quarter

Real estate experts foresee greater stability in Amaravati’s real estate market within 3-6 months as the new government’s policy agenda unfolds. While land parcels present scope for an early mover’s advantage, project launches in the residential category are likely to pick up in the coming months.

Also Read: Top multinational companies bet big on Hyderabad’s commercial real estate market, lease 8.7 lakh sq ft of office space

“It will take at least a quarter before we see new launches coming up in the city by developers. Right now, there are not many good options available for investors in the residential category,” experts said.

5. Can investors expect higher returns from the Amaravati real estate market?

Typically, a growing market offers higher returns due to limited entry barriers and small ticket sizes. In the next few quarters, capital appreciation and rental yields in Amaravati will remain key monitorables for prospective investors, said real estate experts.

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